The National Association of Agricultural Contractors (NAAC) is warning farmers and land managers that contracting prices will have to rise in the coming days and weeks.
James Bannister, NAAC Chairman stated: “As fuel prices double and continue to climb, machinery costs spiral and labour remains at a premium for skilled operators, it will no longer be possible for agricultural contractors to retain static prices. Looking at the escalation in input costs, with spring work potentially only days away, professional contractors will have no choice but to increase costs to sustain their own businesses.”
Contractors have to find the right balance to retain a loyal customer base while keeping pace with rising inflation, but offering the cheapest service can be a clear route out of the industry. Machinery replacement costs and keeping good labour were already headaches for contractors before the current fuel hike.
In the last few days, red diesel costs have leapt from 80p per litre to over £1 and are still climbing.
“Only the foolish will try and cling to stationary prices this spring, as any contractor that understands their own costs will recognise that price increases are vital to keeping pace, earn a living and retain some stability and longevity in their business,” said Jill Hewitt, NAAC chief executive. “Many farmers now rely on their contractor to take on roles that they may no longer have the labour, skills or machinery to complete – but contractors cannot be expected to bankroll their customers and the industry must brace itself for price rises.”
Expectations on contractors continue to escalate with environmental protection, specialist training, record keeping and having the latest technology. All of these require a new level of expertise and equipment. However, the cost of basic inputs is forcing tough decisions.
“Contractors, like the rest of agriculture, are being forced to look hard at their bottom line and escalating business expenses will need to be passed on,” said Meurig Raymond, NAAC President. “A successful contractor will need to cost individual operations carefully and accurately and for a farmer to bring in a reliable, professional contractor that has trained staff, working safely, with the well-maintained kit, this will come at a cost.”
The NAAC recently launched a new online pricing tool for its membership alongside Andersons Consulting, which will allow contractors to evaluate each operation and take into account all costs. This will allow quotes to be made and backed up with statistics and reveal a price that is realistic in the current climate.